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Inverted Hammer and Shooting Star Candlestick Patterns

April 18, 2017 at 10:17by K. Prabhu

In technical analysis, the inverted hammer candlestick pattern is the reverse of the hammer pattern. The pattern is comprised of one candle. It is easily identified by the small body with a shadow at least two times greater than the body. The color of the small body is not important, but the green body has more bullish indications than a red one. An inverted hammer pattern forms when the buyers push the stock price higher against the sellers. However, the stock retraces and closes near the open. The pattern reflects buying interest for technical, psychological or fundamental reasons. When the pattern forms in a downtrend, it suggests a possible market bottom or change in trend. A positive day requires the following day to confirm this signal. A shooting star candlestick pattern has one candle. It looks like a shooting star. The open, close, and low are near the low of the candlestick. The shooting star candlestick pattern forms when buyers push the price higher against the sellers. However, the stock falls and closes near the low. The pattern reflects selling interest for psychological or fundamental reasons. When the pattern forms in an uptrend, it suggests a possible market top or change in trend. So, it is a reversal candlestick pattern. These patterns are used for trend identification. The inverted hammer pattern is used as an entry point. The shooting star pattern is used as an exit point. It is advisable to use a combination of patterns and indicators to determine your trading strategy.